D.1 Levelised electricity costs

The levelised costs, in 2010 dollar terms, for different power technologies fitted with CCS range from US$114/MWh for oxyfuel combustion to US$130/MWh for post-combustion capture at a supercritical pulverised coal plant (Figure D1). This represents an increase in costs over non-CCS power plants of around 40 per cent for NGCC and IGCC plants and more than 60 per cent for supercritical black coal plants.

FIGURE D1 Levelised costs of electricity for different capture technologies

Source:Global CCS Institute and Worley Parsons (2011).

The costs for transport and storage are often considered to account for a relatively small share of the total costs of a CCS project, around 5–7 per cent in many cases (Figure D1). This reflects modelling choices often made to transport the CO2 to high-capacity onshore saline reservoirs with good injectivity that are less than 200 km from the source of the emissions. Transporting the CO2 a similar distance offshore can double the transport costs and doubling the distance offshore may double that cost again. Storing in off-shore rather than onshore saline aquifers can also double or triple the storage cost (ZEP 2011). While transporting CO2 is a mature technology and considered relatively low risk, the costs associated with characterising a secure storage site, even a good site, can present challenges to projects. Site characterisation costs must be borne well in advance of any opportunity to recover costs, and have non-trivial levels of risk as the site assessment may indicate the site is not suitable for storage, and another site must be located and the process started again.

Cost studies are often based around building a plant in the US, and translating those studies to other countries or regions often results in even larger increases in costs over unabated fossil fuel plants, reflecting different capital costs as well as different country-specific requirements, including different fossil fuel costs. For example, for CCS plants in the UK, it was recently estimated that incorporating CCS would increase costs by between 75–116 per cent (Parsons Brinckerhoff 2011). Even within a single country, regional factors influencing labour costs or fuel types can change costs for otherwise identical projects. In the US, the difference between labour costs in union versus non-union workforces alone can increase project costs by 20 per cent.

Similarly, there can be significant differences and inconsistencies in the way CCS costs are currently calculated and reported by various authors and organisations (Rubin 2012). The different cost estimates observed in studies often arise due to differences in assumptions regarding technology performance, the costs of inputs, or the methodology used. Nonetheless, in detailed studies such as those prepared by the IEA (Finkenrath 2011), the Global CCS Institute (Global CCS Institute and WorleyParsons 2011), and the National Energy Technology Laboratory (NETL 2011), many of these differences disappear when the assumptions are normalised and a common methodology applied. In these specific studies, the effect of any individual assumption on the estimated levelised cost for power generation is generally 5 per cent or smaller (Global CCS Institute 2011a). In other studies, these effects can often be more pronounced, but at the same time, may lack transparency around key assumptions or methodologies.

Given the importance of CCS as an option for mitigating energy-related CO2 emissions, efforts to improve and harmonise the methodology for estimating and communicating CCS costs are being undertaken by an international group of experts from industrial firms, government agencies, universities, and environmental organisations. Key agencies involved in cost estimation, including NETL, the EPRI, the IEA, and the Global CCS Institute are engaged in this task in order to improve transparency and understanding.

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